Microsoft: obituaries are premature

This morning’s Observer column:

One of my favourite cartoons shows a team of scientists in a Nasa control room clustered around a big screen. Their spacecraft has just landed on a very distant planet and has begun transmitting data back to base. A guy in overalls is saying to his assembled colleagues: “Now all we have to do is figure out how to install Windows 95.”

Ah yes, Windows 95… I remember it well. It signified the moment when Microsoft finally managed to implement the user interface invented by Xerox in the early 70s. It was launched with the biggest hype-storm that the computer industry – or indeed any other industry – had ever seen. Microsoft paid the Rolling Stones an unconscionable amount of money (we never found out how much) to use Start Me Up as the musical backdrop for the launch. The first internet boom, triggered by the web and the Netscape browser, was just beginning to roll and Windows 95 was the first Microsoft operating system to have a TCP/IP stack (needed to connect to the internet) baked in.

Back then, the PC was the sun in the computing universe around which everything else revolved. And Microsoft controlled well over 90% of the PC software market. So Windows 95 really was a big deal.

Last week, 20 years on, Microsoft launched Windows 10 with the kind of faded hoopla that accompanies 60s discos…

Read on

And then, of course, there is the fact that Microsoft is one of the very few large corporations that is still doing serious, high-quality, long-term research.

The new Microsoft: Google

“Google held its annual developer event, IO, which is a platform for lots of announcements. For me, the overall theme was that Google is a cloud and machine learning company, not a hardware or OS company, and the further we got from devices and the more into the cloud and into big data analysis the happier the presenters were. Beyond that, Google’s self-confident ambition to be the platform for everything is apparent – this is very obviously the new Microsoft.”

Benedict Evans 31 May 2015.

Internet Explorer RIP

This morning’s Observer column:

Let’s spool back a bit – to 1993. By then, the internet was roughly 10 years old, but for its first decade had been largely unknown to anyone other than geeks and computer science researchers. Two years earlier, Tim Berners-Lee had created and released the world wide web onto the internet, but initially no one noticed. Then in the spring of 1993, Marc Andreessen and Eric Bina released Mosaic – the first graphical browser – and suddenly the “real world” realised what the internet was for, and clamoured to get aboard.

But here’s the strange thing: Microsoft – by then the overwhelmingly dominant force in the computing world – failed to notice the internet. One of Bill Gates’s biographers, James Wallace, claimed that Microsoft didn’t even have an internet server until early in 1993, and that the only reason the company set one up was because Steve Ballmer, Gates’s second-in-command, had discovered on a sales trip that most of his big corporate customers were complaining that Windows didn’t have a “TCP/IP stack” – ie, a way of connecting to the internet. Ballmer had never heard of TCP/IP. “I don’t know what it is,” he shouted at subordinates on his return to Seattle. “I don’t want to know what it is. But my customers are screaming about it. Make the pain go away.”

But even when Microsoft engineers built a TCP/IP stack into Windows, the pain continued…

Read on

Google: the next Microsoft?

This morning’s Observer column:

Bill Gates once said that the only technology company that reminded him of Microsoft in its early days was… Google. Thanks to one of those delicious ironies in which capitalism excels, guess which company Google now reminds people of? Answer: Microsoft in its current dotage. Gates’s creation was once even more dominant in the industry than Google is now. It had three core products – the Windows operating system, Office and Windows Server – which were licences to print money. Microsoft had huge revenues that just rolled in every quarter, just as Google’s advertising revenues do today, and on the back of them built a huge 128,000 employee company. But, cushioned by its money-pump, it failed to innovate and, in particular, failed to address the decline of the desktop PC and the rise of mobile computing.

Despite Google’s self-image of an ultra-agile, young company, in fact it’s become a 55,000-employee monster, which is what is leading some people to see parallels with Microsoft…

Read on.

Bitter XPerience

This morning’s Observer column.

It was a clear, windless night. All around was a wonderful panorama crowned by the glorious dome of St Paul’s in the distance. Then I started to look at the tall, glass-walled office blocks in my immediate vicinity. Although it was after 10pm, the lights were on in every building, enabling me to see into hundreds of offices. These offices varied in size and decor, but they all had one thing in common. Somewhere in every one of them was a desk on – or under – which stood a PC.

What then came to mind was the memory of a tousle-haired young entrepreneur named Bill Gates, who once articulated a vision of “a computer on every desk, each one running Microsoft software”. What I was looking at that December night was the realisation of that vision. Every one of the machines I could see was running Microsoft software: a software monoculture, if you like.

Microsoft’s dominance was a testimony to the power of network effects and of technological lock-in. It led to a world in which nobody ever got fired for buying Microsoft products and no software innovation gained traction unless it was designed to run under Windows.

For a time, Microsoft was the winner that took all. It would be churlish to pretend that this was all bad news, because the de facto standardisation that Microsoft brought to personal computer technology enabled the vast expansion of the PC industry and accelerated the adoption of computers in offices and homes.

But accompanying these substantial benefits there were some significant downsides…

Read on

More fallout from the NSA revelations

From today’s New York Times

For years, Microsoft has let its customers in Europe, including businesses and organizations, keep their online data close to them. The company operates big data centers in Amsterdam and Dublin for that very purpose.

It now looks as if the company will deepen its commitment to letting those customers decide where their information is stored, at least partly because of concern about spying by the National Security Agency.

In an interview with The Financial Times, Brad Smith, Microsoft’s general counsel, said the company’s customers should be able to “make an informed choice of where their data resides.”

“Technology today requires that people have a high degree of trust in the services they are using ,” he told the paper. “ The events of the last year undermine some of that trust,” he said. “That is one of the reasons new steps are needed to address it.”

Interesting. In some ways, Microsoft is closer to the business community than are Google & Co. They may also be sensitive to the fact that some big European companies (e.g. Siemens) are offering European-based cloud services.

Steve Jobs on what went wrong at Microsoft

From one of the last interviews Jobs gave:

I have my own theory about why decline happens at companies like IBM or Microsoft. The company does a great job, innovates and becomes a monopoly or close to it in some field, and then the quality of the product becomes less important. The company starts valuing the great salesmen, because they’re the ones who can move the needle on revenues, not the product engineers and designers. So the salespeople end up running the company. John Akers at IBM was a smart, eloquent, fantastic salesperson, but he didn’t know anything about product. The same thing happened at Xerox. When the sales guys run the company, the product guys don’t matter so much, and a lot of them just turn off. It happened at Apple when Sculley came in, which was my fault, and it happened when Ballmer took over at Microsoft. Apple was lucky and it rebounded, but I don’t think anything will change at Microsoft as long as Ballmer is running it.


Employee #30 leaves the stage

Astute Wired comment on Steve Ballmer’s departure (announcement of which increased the value of his Microsoft stock by three quarters of a billion dollars btw):

The 21st century doesn’t look good for the tech giants of the ’80s and ’90s. HP and Dell have lost much of their mojo to more nimble operations in Asia that are now building vast swathes of the hardware that drives the web’s most popular services. Oracle is struggling in the face not only of those hardware upstarts, but also a whole new breed of software makers and web companies offering tools that suit the modern internet in ways Larry Ellison’s aging software never could. And then’s there’s Ballmer and Microsoft, who had even more to lose — and lost it.

In some ways, it’s hard to blame Ballmer. Like HP and Dell and Oracle, Microsoft suffers from the innovator’s dilemma. It built such a successful business on the back of Windows — covering not only the desktop and laptops PCs we all used, but also the computer servers and other hardware that drove the modern corporation — it was difficult for the company to change course without undercutting its own bottom line. And the rise of open source software has hit the company right at the heart of its operation.

It’s notable that perhaps the biggest success of Ballmer’s time at the head of Microsoft, the Xbox video game console, wasn’t build on top of Windows, allowing the console to grow and morph on its own, without having to align itself with the Windows monolith.

Ballmer apocrypha and the irrelevance of Microsoft

Apropos my column, Jean-Louis Gasseé has an hilarious spoof Steve Ballmer memo reflecting on how Microsoft screwed up. Worth reading in full, but here’s an excerpt:

For all these years, we scrupulously followed McKinsey’s “Not A Single Crack In The Wall” advice, we’ve managed to successfully Embrace and Extend each and every possible threat to the Windows + Office combo.

While we initially underestimated these new tablets, their threat soon became obvious and we started thinking of ways to protect our franchise. 

That’s when I took the company in the wrong direction. 

To prevent these tablets from penetrating the Office market, I followed our Embrace and Extend strategy and endorsed the creation of hybrid software and hardware: The dual-mode (Desktop and Touch UI) Windows 8 and Surface tablets.

The results are in. Windows 8 hasn’t taken the market by storm. The Windows 8 tablets manufactured by our hardware partners are sitting in warehouses.  We just took a $900M write-off on our RT tablets, now on fire-sale.

It doesn’t matter who actually proposed or implemented the failed strategy, I endorsed it. What matters most — the only thing that matters — is what we’re going to do now.

And while we’re on this topic, Benedict Evans has a very perceptive post arguing that, with the benefit of hindsight, we can now see that Microsoft peaked in 1995. Excerpt:

Just as overnight success can take a lifetime, so overnight collapse can also take a long time. There are founders creating companies today who weren’t born when people were still actually scared of big bad Micro$oft. It stopped setting the agenda 18 years ago. Windows 95 was the moment of victory, but was also the peak: it came just at the moment that the Internet started taking off, and Microsoft was never a relevant force on the internet despite investing tens of billions of dollars.

But you needed a PC to use the internet, and for almost everyone that PC ran Windows, so Microsoft’s failure to create successful online services didn’t seem to matter. Microsoft survived and thrived in the PC internet era, despite appearing to be irrelevant, by milking its victory in the previous phase of the technology industry. PC sales were 59m units in 1995 and rose to over 350m in 2012. Of course, that’s now coming to an end.

Though it looks like we’ve passed the tipping point, this process isn’t going to be over quickly. PC sales aren’t going to zero this year. But the replacement cycle, already at 5 years, will lengthen further and further, more and more apps will move to mobile or the cloud, and for many people the PC will end up like the printer or fax – vestigial reminders of an older way of doing things. Microsoft may yet manage to turn Windows tablets and phones into products with meaningful market share, but it will never be dominant again.

LATER: Lovely piece in Slate which explains Microsoft’s decline in terms of the storylines of The Wire.

How Microsoft spent a decade asleep at the wheel

This morning’s Observer column.

Coincidentally, in that same year, Gates stepped down from his position as CEO and began the slow process of disengaging from the company. What he failed to notice was that the folks he left in charge, chief among them one Steve Ballmer, were prone to sleeping at the wheel.

How else can one explain the way they failed to notice the importance of (successively) internet search, online advertising, smartphones and tablets until the threat was upon them? Or were they just lulled into somnolence by the sound of the till ringing up continuing sales from the old staples of Windows and Office?

But suddenly, that soothing tinkle has become less comforting. PC sales are starting to decline sharply , which means that Microsoft’s comfort zone is likewise set to shrink. Last week, we had the first indication that Ballmer & Co have woken up. In a 2,700-word internal memo rich in management-speak drivel , Ballmer announced a “far-reaching realignment of the company that will enable us to innovate with greater speed, efficiency and capability in a fast-changing world”.